Does New York's $20,000 pension exclusion apply to a Roth conversion?

Yes. The state's own guidance says the pension and annuity exclusion applies to conversion income. If you are 59½ or older at the time of the conversion you can exclude up to $20,000 of it, per person for a married couple. The $20,000 is a single cap shared with any other IRA withdrawals and private pension income you receive that year.

How much New York tax is due on a $100,000 Roth conversion?

About $4,285 for a married couple both over 59½ who also draw $40,000 from an IRA in 2026. The couple's $40,000 exclusion is used by the draw first, so the full conversion is taxed at New York rates. A couple with no other IRA income would shelter $40,000 of the conversion and pay less.

Roth conversions · New York

Does New York tax a Roth conversion?

By Jim Swiech, CPA · Updated September 5, 2026

Quick answer

Yes.New York follows the federal treatment, so the converted amount is included in New York income in the year of the conversion and taxed at the state's regular rates.

But if you are 59½ or older, New York's pension and annuity exclusion lets you shelter up to $20,000 per personof that conversion income. The state's own guidance says so directly. Many New Yorkers, and many tax preparers, do not know the exclusion applies to conversions.

How New York treats the conversion

New York's Department of Taxation and Finance addressed Roth conversions in a technical memorandum, TSB-M-98(7)I. The rule is simple: income from converting a traditional IRA to a Roth IRA is taxable to New York to the same extent it is taxable federally. Because federal law taxes the entire pre-tax amount converted, New York does too. New York City and Yonkers residents pay their local income tax on it as well.

The $20,000 exclusion

The same memorandum says the pension and annuity exclusion applies to conversion income. If you are 59½ or older at the time of the conversion, you may exclude up to $20,000 of it. For a married couple filing jointly where both spouses are 59½ or older, each spouse has a $20,000 exclusion for distributions from his or her own accounts, so a conversion split across both spouses' IRAs can shelter up to $40,000.

The catch: it is one $20,000 cap per person, shared with any other IRA withdrawals and private pension income you receive that year. A couple already drawing $40,000 from IRAs has used the whole exclusion before the conversion, so the full conversion is taxed. A couple with no other IRA or private pension income shelters $40,000 of the conversion. Government pensions (New York State, local and federal) are fully exempt on their own and do not use up the $20,000.

The New York math on a $100,000 conversion

Take the same couple as the federal example: married, both 63, 2026. Two versions, one where they also draw $40,000 from their IRAs and one where the conversion is the only IRA income that year.

New York State income tax caused by a $100,000 Roth conversion split evenly between the two spouses' IRAs. Married filing jointly, both 59½ or older, 2026, New York standard deduction, no other income.
Other IRA income that year	Exclusion left for the conversion	New York tax on the conversion
$40,000	$0	$4,285
$0	$40,000	$2,085

Add the federal cost of $12,360 for the couple with the $40,000 draw and their all-in income tax on the conversion is $16,645. The calculator on the Roth conversion page shows both layers when you check the New York box.

New York's rates

New York State taxable income brackets, married filing jointly. Single-filer brackets are roughly half.
Taxable income	Rate
$0 to $17,150	4.00%
$17,150 to $23,600	4.50%
$23,600 to $27,900	5.25%
$27,900 to $161,550	5.50%
$161,550 to $323,200	6.00%
$323,200 to $2,155,350	6.85%

Most retirees converting in the window land in the 5.5% and 6% brackets. New York's standard deduction for a married couple is $16,050, and $8,000 for a single filer.

What New York does not tax

Social Security benefits, at any income level. Pensions from New York State, New York local governments and the federal government, including military pensions, in full. And the first $20,000 per person of other pension, annuity and IRA income after 59½. Those exemptions are why a Buffalo retiree's Roth conversion answer can differ from the national version of the same question, and why the New York layer belongs in the calculation, not as an afterthought.

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Quick answers

Does New York tax a Roth conversion?: Yes. New York follows the federal treatment, so the converted amount is included in New York income in the year of the conversion. It is taxed at New York's regular rates, which start at 4% and reach 6.85% at $323,200 of taxable income for a married couple.
Does New York's $20,000 pension exclusion apply to a Roth conversion?: Yes. The state's own guidance says the pension and annuity exclusion applies to conversion income. If you are 59½ or older at the time of the conversion you can exclude up to $20,000 of it, per person for a married couple. The $20,000 is a single cap shared with any other IRA withdrawals and private pension income you receive that year.
How much New York tax is due on a $100,000 Roth conversion?: About $4,285 for a married couple both over 59½ who also draw $40,000 from an IRA in 2026. The couple's $40,000 exclusion is used by the draw first, so the full conversion is taxed at New York rates. A couple with no other IRA income would shelter $40,000 of the conversion and pay less.

Updated September 5, 2026. Reviewed by Jim Swiech, CPA.

Educational and general in nature. Not tax, legal or investment advice, and not a recommendation to convert. Figures are 2026 federal amounts under the assumptions stated on this page; your return has more lines than any example. Go Beyond Tax is a brand of Swiech Consulting LLC.